Content of the material
- How Much Do Real Estate Agents Make in California?
- How Much Realtors Make FAQs
- How Are Real Estate Fees Paid?
- Do Real Estate Agents Get Paid a Base Salary?
- Are You Supposed to Pay Your Real Estate Agent?
- Do Real Estate Agents Get Paid Weekly?
- What Percentage Do Most Real Estate Agents Charge?
- 💰 Never pay the full 6% commission again
- Types of real estate agents
- Real estate agent vs. Realtor
- Real estate agent vs. broker
- Alternatives to using a real estate agent or Realtor
- How Does the Real Estate Commission Get Split?
- How Commission Gets Split Between Real Estate Agents
- How Commission Gets Split with the Broker
- Can Real Estate Agents Negotiate a Higher Commission Split?
- How much do real estate agents make on commission?
- How and When Does the Money Change Hands?
- Commissions When the Sale Doesnt Close
- Dual Agency
- Get the free Opendoor app
How Much Do Real Estate Agents Make in California?
Ask California agents how much they make and you’ll hear a lot of different numbers. If you’re looking for an average, the Bureau of Labor Statistics (BLS) has calculated it for you. According to their research, in 2017 the average annual salary for California agents was $68,860. California brokers earned slightly more with an annual salary of $80,820. That puts California in the highest paid category.
California has the 6th highest annual average salary in the U.S. But that’s not the whole story. Salaries range from $24,970 for the bottom 10th percentile up to $123,700 in the top 10th percentile. California’s top earners rank 4th in the country.
Why the nearly $100,000 difference? How much you work is going to affect how much you earn. Location also makes a difference. In the Santa Maria-Santa Barbara area, the average salary is over $82,000. Go further inland to Portsville and the average is just over $43,500.
How Much Realtors Make FAQs
How Are Real Estate Fees Paid?
Real estate commissions are deducted directly from the sale proceeds at closing. The amount is then paid directly to real estate brokerage firms, which split them with the agents involved.
Do Real Estate Agents Get Paid a Base Salary?
Most real estate agents are paid on a commission-only basis. But certain agents—including those who are employed by companies like Redfin—get a base salary plus bonuses.
Are You Supposed to Pay Your Real Estate Agent?
Consumers don't pay real estate agents directly. Brokers receive the commission, which is taken from the total proceeds of the sale. This amount is then split between the agency and the agent.
Do Real Estate Agents Get Paid Weekly?
Real estate agents do not get paid weekly. Instead, they work for commissions on the sales they make. These commissions are split between the agency and the agent and are paid following closings.
What Percentage Do Most Real Estate Agents Charge?
Real estate commissions typically range anywhere between 4% and 6% of a property's sale price. This amount is further divided between the agency and the agent who worked on the sale.
💰 Never pay the full 6% commission again
The “standard” 6% commission predates the internet, when realtors had to work harder to find clients and potential buyers.
At Clever, we connect top-rated real estate agents with sellers like you at zero upfront cost to the agents — so they’re willing to pass savings along to you.
You’ll get full-service support for pre-negotiated listing fees of just 1% or $3,000, saving you thousands!
Types of real estate agents
You may hear the terms ‘real estate agent,’ ‘Realtor,’ or ‘brroker’ used interchangeably. But there are some key differences between these professionals.
Real estate agent vs. Realtor
All Realtors are real estate agents or brokers. But not all real estate agents or brokers are Realtors.
Realtors are members of the National Association of Realtors (NAR). And the Realtor trademark is intended to stop agents who aren’t Realtors from claiming they are.
The NAR would say, with some justification, that its members have greater expertise (they have to pass additional exams) and are held to higher professional standards than other real estate agents.
Real estate agent vs. broker
A real estate agentis someone who has passed his or her state’s relevant exams and who’s been licensed to practice as an agent.
A real estate license is the lowest level of qualification for people to facilitate the buying and selling of homes.
Each state sets its own exam standards and continuing education requirements. It’s easier to get a licence in some states than others.
A real estate broker has gone the extra mile and taken additional exams. So he or she should — theoretically — have greater knowledge and expertise than an agent.
And a broker is more likely to have a senior post in a real estate brokerage, often managing other agents’ activities.
The Bureau of Labor Statistics reports the national median income of a real estate agent was $51,220 in 2020.
By contrast, the BLS also found real estate brokers tend to make about $10,000 a year more than sales agents.
Alternatives to using a real estate agent or Realtor
Many sellers think real estate agents’ commissions as too high and try to avoid them.There are three main ways of selling a home without such high costs:
- For sale by owner — At its most basic, this might involve putting up a yard sign, printing and distributing some flyers, and telling everyone you know your home’s for sale. It’s cheap and sometimes works, especially in hot real estate markets. But the risk of undervaluing or overvaluing your home is high
- Flat-fee MLS listing by owner — The MLS is the Multiple Listing Service. It’s the online resource that real estate agents use to let other agents and buyers know that a home is available. Owners can add their listings (which may appear on Realtor.com and Zillow, too) by paying a flat fee — or a smaller flat fee with a success charge on sale
- Trimmed-down services — Some agents offer lower commissions for a more basic service. You might get a menu — from MLS alone through increasingly complete levels of service — from which you choose what you want and how much you’re willing to pay
Are these better ways to sell? That will depend on many factors, including:
- How strong your local property market is
- How good you are at appraising your own home’s value
- How much effort you’re prepared to put into finding a buyer
- How confident you are in your ability to shepherd your sale through to closing
If you’re sure you can handle all those as well as an agent, feel free to sell without enlisting one.
But for many people, working with a real estate agent, broker, or Realtor gives them peace of mind they’re getting the best price on their home from the most qualified buyer.
How Does the Real Estate Commission Get Split?
However, 6% is split between the seller’s agent and the buyer’s agent. That amount is then shared with the agent’s broker, usually at a ratio of 60/40 in the broker’s favor.
Let’s say an agent successfully sells a home for $1M. The breakdown would look something like this:
- 6% total commission on the sale ($60,000)
- split between the listing agent and buyer’s agent 50/50 ($30,000)
- 60/40 split between agent and broker ($12,000)
Often, these numbers change with experience, particularly the ratio of the split that an agent shares with their sponsoring broker. Over time, the split may shift in the agent’s favor, or the agent may become a licensed real estate broker themselves and make additional money sponsoring others.
How Commission Gets Split Between Real Estate Agents
The commission is split between the seller’s agent and buyer’s agent right down the middle. Usually, the commission is paid directly to the brokerage, who distributes it to the agent.
How Commission Gets Split with the Broker
The typical commission split between an agent and broker is 60/40 in the agent’s favor. Over time, however, the brokerage fee may decrease depending on an agent’s productivity and experience. Still, the agent will always pay a brokerage fee, even if it’s just 20% of their half.
Can Real Estate Agents Negotiate a Higher Commission Split?
An agent can negotiate a higher commission split with a brokerage the same way they would ask for a raise in a more traditional job. Performance, experience, productivity, and even better offers from other firms are solid arguments for negotiating a higher commission split.
How much do real estate agents make on commission?
On paper, listing agents receive $7,654 to $11,120 from the average home sale, while a typical buyer's agent commission ranges from $7,657 to $10,218. However, the average realtor's take home pay in the U.S. is only around $5,667.
This is obviously much less than the commission fees you'll pay at closing. Most real estate agents work through a brokerage, such as Keller Williams, Coldwell Banker, or RE/MAX. Because brokerages cover certain overhead costs, agents are required to pay them a portion of their commission after the sale closes.
An agent's exact take home pay depends on the agreement they've worked out with their brokerage. In general, more experienced agents keep higher percentages of their commission than less experienced ones.
Take home fees for the average sale* 🧑 Listing agent $4,592 to $6,700 🏢 Broker $3,061 to $4,448 💰 Total listing fees $7,654 to $11,120 *Estimates for 2022
How and When Does the Money Change Hands?
Real estate commissions are paid like this:
- The seller pays the listing brokerage.
- The listing brokerage pays the listing agent.
- The listing brokerage pays the buyer's brokerage.
- The buyer's brokerage pays the buyer's agent.
The seller effectively pays your buyer's agent to negotiate on your behalf.
There are circumstances under which a buyer might pay a brokerage directly, such as when there’s no commission offered because the property is for sale by owner. The commission is typically paid by the seller to the listing brokerage. The listing brokerage divides the commission in some fashion with the broker of the agent who brings an offer.
Compensation is typically made at closing when it's deducted from the seller's proceeds from the sale.
Buyers don't have any say in how much commission is paid by the seller, and they don't have to worry about personally compensating their agents. Of course, they're free to do so if they want to sweeten an offer made on the home by offering to pay a portion of the seller's commission, but again, the buyer cannot pay their agent directly.
Commissions When the Sale Doesnt Close
Commissions are generally paid only when a transaction settles. There are instances, however, when a seller is technically liable for the broker's commission even if the transaction is not complete. If the broker has an offer from a buyer who is ready and able to make the purchase, the broker may still be entitled to a commission if the seller:
- Changes their mind and refuses to sell
- Has a spouse who refuses to sign the deed (if that spouse signed the listing agreement)
- Has a title with uncorrected defects
- Commits fraud related to the transaction
- Cannot deliver possession to the buyer within a reasonable time
- Insists on terms not listed in the listing agreement
- Mutually agrees to cancel the transaction with the buyer
Listing agreements vary and each is individually negotiated. They may include contingencies that require sellers to pay a commission even if the home doesn’t sell.
Agents on both sides of a deal have a fiduciary responsibility to their clients. This means agents must disclose known issues about a property and negotiate in good faith. As such, a buyer’s agent must act in the best interests of their customers just as a seller’s agent must represent the best interests of their clients. There may be a time when a listing agent also represents a buyer (for the same property), and this is known as dual agency.
Because dual agency makes it difficult to negotiate and represent both parties of a real estate deal, several states prohibit the practice. The State of California allows dual agency, but only if the agent or broker fully discloses it to the buyer and seller. To say the least, this becomes a precarious situation.
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